Middle East|Syria's Oil Resources Are a Source of Contention for Competing Groups

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Syria's Oil Resources Are a Source of Contention for Competing Groups

By Josh Wood

March 20, 2013

BEIRUT — Once highly dependent on revenue from petroleum sales, the Syrian government has lost control of many of the country’s major oil fields over the past few months as Kurdish forces and the rebel Free Syrian Army have made significant gains in the east.

For some rebel units, captured oil could pay for weapons. For the Kurds, it could furnish greater autonomy.

Syria was never particularly known for its oil wealth. In a region that is home to many of the world’s largest oil producers, Syria’s 2.5 billion barrels of proven reserves were far overshadowed by Saudi Arabia’s 267 billion or neighboring Iraq’s 115 billion.

But to the Syrian government, oil was a way to help balance the books.

“It was a very essential contribution to the state budget,” said Samir Seifan, a Syrian economist now living in Iraq. “Also, it was the main source of hard currency.”

In 2010, before the uprising against President Bashar al-Assad began, oil sales brought in over $4 billion, representing about a third of Syria’s total export revenue. In earlier years, when output levels were higher than the 385,000 barrels a day posted in 2010, oil sales accounted for an even larger chunk of export receipts.

“Definitely they were relying on it,” said Nassib Ghobril, the head of economic research at Byblos Bank in Lebanon, which also operates in Syria. “It was basically the largest source of revenue.”

The bulk of Syria’s oil is split between Hassake, a province in the far northeast of the country where the Kurds are a majority, and Deir Ezzor, further south.

After government troops withdrew from the oil town of Rumeilan in Hassake Province in October, the militia of the Democratic Union Party took control of the area. Commonly referred to by its Kurdish-language acronym P.Y.D., the party is the most dominant Kurdish faction in Syria and has links to the militant Kurdistan Workers’ Party, or P.K.K., in Turkey.

“In order to protect and distribute these natural resources fairly, the Kurdish force took control of these fields,” said Alan Semo, a P.Y.D. spokesman based in London.

Last September, a production manager in Rumeilan said the fields produced 166,000 barrels a day before the conflict began, just under half of Syria’s daily prewar output. The conflict had cut output from Hassake in half, he said at the time, speaking on condition of anonymity because he was a Syrian government employee and feared consequences from speaking to foreign journalists.

Hassake Province produces heavy crude, which is harder to extract, more difficult to refine and sells at lower prices than lighter oils. But in an economy destroyed by a war between cash-strapped foes, the oil fields are a valuable asset.

For decades, the more than two million Kurds in Syria suffered under government policies of discrimination and campaigns of persecution. Many, including members and supporters of the P.Y.D., want to secure some sort of broadened autonomy for the ethnic group in what they call Western Kurdistan.

The P.Y.D. is hostile to the government but also wary of Syria’s rebels, with whom its militia has clashed on several occasions. The P.Y.D.’s control of a significant portion of Syria’s oil could serve as a bargaining chip for greater autonomy down the line. It could also bankroll the purchase of weapons to help cement the party’s dominant position.

Further south, a stepped-up push by Free Syrian Army units that started late last year has won control of several major oil fields in Deir Ezzor, which produces a more marketable light crude.

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An oil field under the control of Kurdish militias in an area near the Iraq border.CreditManu Brabo/Associated Press

The loss of the oil fields was a blow to the government, but even when they retained control they had problems. Embargoes put in place in 2011 blocked oil sales to Europe, the destination for nearly all of the government’s oil exports, severely limiting revenue.

Before the war, Syria exported about half of its daily oil output and refined the rest, though its refineries were unable to process enough oil to satisfy the country’s demands.

“Capacity of the refineries was not sufficient,” said Samir Aita, the editor in chief of the Arabic edition of the Paris-based newspaper Le Monde Diplomatique and a member of the Syrian Democratic Forum, an opposition group. “So they would export crude oil and import gas oil and diesel.”

The government’s military vehicle fleet largely runs on diesel or gas oil. “Without oil products, the government cannot run, it cannot fight at all, because now it is very difficult to secure oil products from imports from outside,” said Mr. Seifan, the economist. “They don’t have enough money and it’s not easy to find sources.”

In a report published this month by the U.S.-based organization Human Rights First, diesel supplied to the government was described as “a vital and lethal resource not sufficiently producible inside Syria.”

To secure diesel and gas oil, the government has supplemented purchases with barter deals, swapping its unrefined crude oil for refined products from friendly countries like Russia, Iran and Venezuela. Refined products have also filtered through to the regime from private entities in some other countries, the report said.

In May 2012, Sufian Allaw, then Syria’s Minister of Petroleum and Mineral Resources, said the country had spent $3.5 billion to import oil products since the start of the conflict, according to the Syrian state news agency, SANA.

In northern Lebanon, where support for Syrian rebels is widespread in the Sunni Muslim community, armed attacks against trucks carrying oil products to Syria have become frequent in an attempt to limit the amount of fuel getting to the regime.

Still, despite oil’s importance to the government and its military effort, rebel groups have for the most part refrained from launching attacks on oil infrastructure throughout the war — even the long, mostly unguarded pipelines connecting fields to refineries that are often attractive targets in insurgencies. This has left the oil infrastructure mostly unharmed.

“The F.S.A. knows, post-Assad, oil is going to be a major revenue earner,” said Andrew Tabler, an analyst with the Washington Institute for Near East Policy.

Also, in the complicated economy of the war, rebel groups in parts of Syria often get hold of oil products that filter through government lines, possibly another reason attacks have been limited.

While the oil infrastructure remains mostly intact, producing and selling oil for groups that control the fields is a more difficult matter.

“I think the F.S.A. is not able, in the short term, to run any of the oil fields,” said Mr. Seifan, referring to the Free Syrian Army and citing the need for experts and engineers to properly extract oil.

There have been reports of rebel units smuggling unrefined crude oil to neighboring countries and selling it at cut rates, but so far this remains a limited operation. As the war drags on, however, more profitable arrangements could be made for both the Free Syrian Army and the Kurdish P.Y.D. to extract, smuggle and sell oil.

“The fight of these oil fields has been a fight on revenues and sustaining of the war effort for both sides,” Mr. Aita said.